Insurance Companies Bail On Duke Energy; Say Company Knew Of Coal Ash Risks, Did Nothing

[hatrack]

Dozens of insurance companies say they're not obligated to help pay for Duke Energy Corp.'s multi-billion dollar coal ash cleanup because the nation's largest electric company long knew about but did nothing to reduce the threat of potentially toxic pollutants. The claim is in a filing by lawyers for nearly 30 international and domestic insurance companies that were sued by Duke Energy in March to force them to cover part of the utility's coal ash cleanup costs in the Carolinas.

The 57 policies generally promise to help Duke pay what it's legally obligated to pay for property damage "caused by an occurrence," even if liability for an incident doesn't become known until decades later, the Charlotte-based company said in the same filing last week in the state court that hears complex business cases. Both sides filed the document in describing a litigation timeline that would lead to trial in mid-2019.

The insurers counter they're not on the hook to pay. They say that because Duke Energy stored its coal ash in unlined pits as part of its normal practices, any property damage "was caused intentionally, by or at Duke's direction" and there weren't any distinct pollution events that triggered coverage.

They note that Duke was well aware that burning coal to generate electricity leaves byproducts containing toxic substances that can contaminate groundwater. They say Duke's ash ponds were built without safeguards to prevent groundwater pollution, and some ash ponds placed the ash in direct contact with groundwater.

EDIT

http://abcnews.go.com/US/wireStory/insurers-off-hook-duke-energy-knew-coal-ash-48037387

[Demsrule86]

1. They made a deal with the devil and now are obligated to pay.

[northoftheborder]

2. Insurance companies need to stop rewarding bad behavior in ALL areas of coverage.

Health, property, environmental degradation, etc.....

[Finishline42]

3. Talk about unfunded liabilities - over 400 fly ash containment ponds in the US

So here's my theory about one of the costs of producing electricity from coal that escalated dramatically in the last 10 years. It all hinges on the catastrophic breech of the TVA containment pond in East Tennessee in Dec 2008. TVA had over a $1 billion in clean up costs.

So a company like Duke Energy, which has a number of these storage ponds though out their facilities, has insurance on them. Every year their insurance company comes up with a figure for the insurance - the actuaries try to come up with a number that accounts for the risk. The account manager for the insurance company meets with someone at Duke tasked with getting the best price. They come up with a number something less than the starting number and go out to celebrate the deal. Everybody's happy.

Then comes the breech at the Kingston TVA plant in Dec 2008. Now instead of an educated guess, the actuaries have a real event to base the risk of those fly ash containment ponds. My guess is that it's significantly higher than the previous number. Also, it's a cost that a natural gas plant doesn't have. It's another nail in the coffin for using coal to generate electricity.

[hatrack]

4. The killer bit, or so it would seem from the article, is that the ponds are unlined

Meaning (as the insurance companies are interpreting it) that the utility companies planned to allow continuous release of coal ash waste from the moment the first truckload hit the ground.

Without a liner, fly ash ponds were never going to do anything BUT leak, and were a deliberately constructed means of introducing coal ash waste to groundwater and the surrounding soils on a long-term, low-speed basis.

Coal waste thus enters the environment continuously, from unlined ponds, AS PLANNED by the utilities. It also enters in larger quantities when dams and culverts fail. The only difference is rate of release.

Insurance companies, of course, won't pay if they can find a way to excuse themselves from doing so. They may have done just that in this case.